Asked by Anonymous
Asked on 15 Sep 2019
I’m using an online broker to buy Apple stock, but from what I know there is a 30% tax on dividends for US stocks.
Do I sell the stocks before dividends payout to not get taxed? Or what do people usually do?
I'm not investing in US stocks at the moment, but from what I read, some people will choose to reinvest their dividends. This way, they won't get taxed for their dividends, and they will also be able to buy more shares.
The withholding tax is on the dividends only and not on your holdings on AAPL stock. So, for example, they declare 1 dollar dividend per share, you will get 70 cents in dividend due to withholding.
Personally, it doesn't make sense to sell the stock before the stock record date so as not to be hit by withholding tax. You will have to do it 4 times a year for 8 transactions in total (4 X buy/sell) as dividends are given quarterly. Not only this but you won't be entitled to the dividend as well. Don't think people will do as what you described, sorry to say.